We still don't have hard data on the client defection rate at E*Trade
If you've been hungry for anecdotal evidence, you may have gotten the idea that some concerned investors are scrambling to rival discounters, like Charles Schwab
Brimming with more than $301 billion in client assets, the popular discount brokerage firm is now looking to earn $0.39 a share for the quarter. That is well ahead of its original bottom-line outlook of $0.27 a share to $0.33 a share. Posting a record 339,000 average of daily client trades last month, its customers are definitely not in hibernation mode.
Then again, this is could be good news for E*Trade. Keep in mind that TD AMERITRADE also had its own fire to stomp out three months ago. When a hacker breach in its database system granted spammers access to its accounts' email addresses, phone numbers, and home addresses, who here didn't think that some patrons would bolt? Some probably did, but November's record trading indicates that TD AMERITRADE is doing just fine in more than offsetting potential bailers.
What if discount brokers have a little more customer loyalty than we thought? It can't just be the comfort of knowing that TD AMERITRADE has addressed its breach, and that E*Trade secured a capital infusion lifeline. Maybe we're not just a bunch of commission rate-chasing lemmings. After all, the major discounters are still growing, despite the alluring zero-commission offers being put out by financial services providers like Bank of America
So while TD AMERITRADE's rosier outlook is clearly welcome news for its shareholders, it's also a fair proxy for the health of the industry as a whole. That explains why most of its peers -- E*Trade, Schwab, Investools
If many of their own clients are doing the buying, consider it a win-win deal for the industry as a whole.
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